Dive Brief:

• Facebook announced that it will begin requiring advertisers to tell users if data brokers provided the information that led to those users being targeted with an ad, according to Reuters. Data brokers refer to firms that collect personal information about users and then sell it to marketers. The new requirement goes into effect on July 2. 
• Facebook is also instituting a new process for how the names of potential consumers supplied by data brokers will be handled. Advertisers wanting to add lists of prospects on Facebook must assure that the data supplier obtained legal consent from the consumers. 
• The new policies are an effort to create more transparency for users, while imposing more accountability on advertisers. Facebook is not taking a stance on whether or not third-party data is good or bad, but is placing importance on obtaining the right to use data and sourcing it responsibly, according to a company official quoted in the Reuters report. 

Dive Insight:

Facebook is continuing to try and allay mounting concerns about its handling of data privacy, and the latest moves will impact digital marketers' strategies by pushing them to be more openly transparent into how they target their ads and work with third-party data providers. The changes are also in-line with some newly-enacted laws, such as the European Union's General Data Protection Regulation — a labyrinthian set of rules that went into effect on May 25 and demand internet companies receive informed consent on any information they collect from their users, or otherwise face steep penalties. 

The new advertiser policies reported by Reuters could help Facebook win back some favor with its users. Consumers don't necessarily mind sharing personal information with platforms and brands, but appreciate when these companies are upfront with how that happens. Being transparent with how personal data is collected and used to target ads can boost engagement by 40% and increase the likelihood of purchases, according to research by Maritz Motivation Solutions and the Harvard Business School.

Marketers might be less receptive to the changes. In March, Facebook said that it would shut down its Partner Categories program, which helps marketers target ads based on third-party data. Advertisers pushed back, saying the restrictions on data brokers would interfere with their ability to target ads. Some threatened to pull their ad dollars, according to Reuters. Facebook later relaxed the rules, allowing marketers to continue using information purchased from third-parties to target ads, but under tougher conditions.

These rocky developments come as Facebook is facing down fresh threats of regulatory scrutiny, as a deluge of privacy controversies have tailed the massive Cambridge Analytical scandal that first broke in March. The Wall Street Journal reported late last week that Facebook made customized data-sharing agreements with companies, including Royal Bank of Canada, Fiat Chrysler and Nissan, that provided access to user data, such as users' friends, phone numbers and a metric called "friend link" that showed how close users are to people in their networks. Facebook previously said it cut off the flow of such information after 2015, but the Journal uncovered many "whitelists" continued to be in effect after the fact.  

​A separate New York Times report from earlier this month detailed the data-sharing partnerships that Facebook has with device makers, including Apple, Amazon, Samsung and others, which gives them "deep access" to users and their friends. Both instances of data collection and sharing could potentially be at odds with a 2011 consent decree that the Federal Trade Commission has in effect, and the U.S. Senate Commerce Committee announced plans to launch a probe into Facebook's practices following the Times' report.